On Tuesday, cocoa prices skyrocketed amid forecasts of arid weather in West Africa and dwindling stockpiles in Intercontinental Exchange (ICE) warehouses.
US cocoa futures for March rose sharply by 7.25% to $7,694.00 per metric ton (MT) on November 12, scoring a 3-1/2 week high. Furthermore, commodity specialists expect the upward pressure to remain with a 2.51% surge to $6,887.00 an MT in the coming market session.
Forecaster Maxar Technologies warned of dry and hot weather in the cacao-producing regions of Ghana and Nigeria. The adverse temperatures and severe lack of rain may negatively impact the 2024/25 season’s mid-crop, scheduled for harvest in April.
Meanwhile, the Ivory Coast’s Coffee and Cocoa Council (CCC) reported that recently harvested beans signaled below-average quality of 105 per 100.00 grams. The regulator recommends 80 to 100 beans for every 100.00 grams, with 80.00 signaling the best quality.
Market analysts cautioned that the global confection industry could crash if the climate scenario extends until year-end. They added that soaring chocolate prices could push consumers to alternative sweets, making it harder for producers to accommodate the steep costs.
To avert a local chocolate crisis, Australia ramped up support for its budding cacao-production industry, headed by Tupaghotua Cocoa Plantation (TCP). Australian High Commissioner Rod Hilton said that TCP’s upgraded solar-drying facilities grant the company a competitive advantage in terms of output and quality.
ICE Cocoa Inventories Plunge to a Record Low
ICE cocoa stocks held in US ports plummeted to a 19-year low of 1,690,008 bags as the 17-month trend of monthly declines continued. Moreover, chocolate manufacturer Barry Callebaut noted that though last week’s showers improved crops, the quality remains far below 2022/23 levels.
The price hike was tempered by the strong performance of the Ivory Coast, the world’s largest cocoa producer. According to the CCC, port arrivals totaled 454,624.00 MT as of November 10, up 30.43% year-over-year from 348,560.00 MT.
Lastly, trader sentiment regarding a potential ICE inventory rebound rose after CCC upgraded the Ivory Coast’s 2024/25 production guidance. It now expects a full-season production of 2.15 MMT, up from the June projection of 2.00 MMT.
